Product sales increased year over year by $60.9 million, or 83%, to $134.3 million for the year ended December 31, 2020. The increase was driven primarily by higher REO sales volume, which increased by 11,546 MTs to 38,367 MTs for the year ended December 31, 2020, as compared to the prior year, reflecting the improved efficiency of our processing operations, while our realized price per REO MT increased 19% year over year, primarily reflecting lower tariffs. Tariff credits from Shenghe contributed $10.3 million in product sales for the year ended December 31, 2020. However, product sales for the year ended December 31, 2020, were negatively impacted by the accounting treatment of the Shenghe Implied Discount in connection with the Original Offtake Agreement, in which $3.7 million of the value of products sold to Shenghe from January 1, 2020, until June 5, 2020, was not recognized as product sales. As mentioned above, starting June 5, 2020, the accounting treatment specific to the Shenghe Implied Discount is no longer required and, going forward, we will recognize product sales on the full value of our sales to Shenghe. See also “Recent Developments and Comparability of Results” section above.
Cost of sales (excluding depreciation, depletion and amortization) increased year over year by $2.5 million, or 4%, to $63.8 million for the year ended December 31, 2020. The increase was driven by higher sales volume and higher operating lease costs from leases that commenced in the second half of 2020, offset by significantly lower per unit production costs. The decrease in production cost per REO MT from $1,980 for the year ended December 31, 2019, to $1,430 for the year ended December 31, 2020, reflected the increased efficiency in processing our rare earth concentrate, driven by higher mineral recoveries in our froth flotation circuit, higher concentrate grade, lower reagent usage per ton of concentrate produced, economies of scale, and improved operational uptime. We believe our cost of sales on a per unit basis has stabilized in the short-term, although we anticipate additional efficiency opportunities as we increase REO production volumes in our milling and flotation circuit over time.
Royalty expense to SNR increased year over year by $0.5 million, or 28%, to $2.4 million for the year ended December 31, 2020, reflecting our increased product sales (prior to the Business Combination, the royalty rate was 2.5% of our gross revenue from products derived from mined ore). Subsequent to the Business Combination in November 2020, we no longer incur this expense on a consolidated basis.
General and administrative expenses increased year over year by $15.9 million, or 143%, to $27.0 million for the year ended December 31, 2020, reflecting $4.7 million in stock-based compensation expense from grants of restricted stock and restricted stock units (“Stock Awards”) during the fourth quarter of 2020 and a $7.1 million increase in professional service and legal fees, including accounting advisory services related to the Business Combination. The majority of the Stock Awards were issued upon the consummation of the Business Combination, and thus, are not necessarily reflective of future grants. Furthermore, prior to the fourth quarter of 2020, we had not granted any Stock Awards nor recorded any stock-based compensation expense. Excluding these items, the increase was $4.1 million, or 37%, mainly due to an increase in personnel costs, reflecting headcount growth, including new hires to support our operations as a public company.
Depreciation, depletion and amortization increased year over year by $2.2 million, or 48%, to $6.9 million for the year ended December 31, 2020, reflecting the impact of additional equipment purchases and depletion of the mineral rights resulting from the SNR Mineral Rights Acquisition in November 2020.
Accretion of asset retirement and environmental obligation remained relatively flat year over year.
Settlement charge of $66.6 million for the year ended December 31, 2020, which was non-cash, was recorded in connection with the termination of the DMA. See also “Recent Developments and Comparability of Results” section above.
Other income, net was $0.3 million for the year ended December 31, 2020, primarily reflecting interest income and an environmental incentive credit. Other income, net, for the year ended December 31, 2019, was $4.3 million, primarily reflecting a gain on the disposal of idle assets and interest income.
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